Let's play HARDBALL.leading off tonight-well, good evening. I'm Chris Matthews in Washington. Leading off tonight: Lunar watch. A Republican leader in Congress put out word today that I am responsible for the weird word that President Obama is from another country. Actually-and we need to use that word more often these days. Actually, a new poll shows that a majority of Republicans, nearly 6 in 10 now, either believe the president was born elsewhere than in the United States or are, quote, "Not sure" about it.

Yes, this is a problem for the Republicans. It's also a problem that while only 1 in 10 Americans give any real credence to this strange claim, the main source of this "Barack is a foreigner" notion can be traced to one part of the country, the South. The rest of the country-North, West, Midwest-thinks it's beneath any real consideration. So what does this say? Why the South? Why do so many Southerners polled either say they're, quote, "Not sure," or say that Barack Obama was definitely born outside the United States? Troubling, isn't it.

Also: Home sweet home tonight. Members of Congress are heading home for the August recess and town halls, but what can they expect when they get there? With health care reform up in the air, Democrats are nervous, Republicans are on the offense, and both sides are finding themselves the targets of tough new TV ads. A lot of members are wary of even holding traditional town meetings because they're turning into chaotic mob scenes.

Plus, new information about Karl Rove's role in the firing of those eight U.S. attorneys. Let's look into what he did.

And interesting numbers coming out of Alaska. You know all politics is local? Well, ex-governor Sarah Palin's negative numbers-her unfavorable number is now higher than her favorable number. Are people mad at her for quitting or what? Or maybe they're just mad at her. That's in the "Politics Fix."

And Rudy Giuliani-big surprise here-takes the policeman's side in the case of the Cambridge professor. That's in the HARDBALL "Sideshow."

First tonight, the "birthers," they're called. Karen Finney is the former spokeswoman for the Democratic National Committee and Todd Harris is a former adviser to John McCain.

You're smiling, Todd...

(LAUGHTER)

MATTHEWS: ... but I'm going to talk to you about something that's not worthy of smiling about. A Research 2000 poll done by Daily Kos shows that 77 percent of the country believes the president is one of us, an American, born here, raised here, elected here, 11 percent believe this thing out there about the birthers movement, that he was somehow born somewhere else, 12 percent, the same 1 in 10, believe they're not sure, or they don't know what they're talking about.

Democrats and independents overwhelmingly, by the way, say, Yes, he was born here and elected properly, legitimately so. But a majority of Republicans, self-identified Republicans, 6 out of 10 now say either they don't think he was born here or they're, quote, they say, "Not sure." And 9 out of 10 people, by the way-look at the geography of this-you're laughing already, Karen...

(LAUGHTER)

MATTHEWS: Nine out of 10 people in the Northwest, 9 out of 10 people in the West say, Yes, of course he was born here. You get down to the South, and more than half have a problem. They think he was born somewhere else or they're, quote, they say, "Not sure."

What do you make of this? Eric Cantor-by the way, he's one of the Republican leaders of the Congress-he said, quote, "Mr. Cantor"-I love the way he speaks for him like he's the pope. "Mr. Cantor finds it ironic that those most eager to talk about the president's citizenship are, in fact, some of his biggest cheerleaders, whether it's Chris Matthews or others on MSNBC, the Huffington Post or camera-toting liberal bloggers chasing people through the streets of Washington."

Well, maybe we should show-let's watch the video of one liberal blogger-this is Mike Stark-trying to get a straight answer out of some members of Congress on this "birther" question.

STARK: No, he has. Chris Matthews held it up on HARDBALL the other night.

BLUNT: (INAUDIBLE) talk to Chris Matthews.

(END VIDEO CLIP)

MATTHEWS: Well, you can talk to me, Mr. Blunt. I like Mr. Blunt. But you know what? I think he's playing games here, guys, because he knows you can't get a passport unless you show your birth certificate. You can't do a lot of things without showing it. This guy has produced his birth certificate. This health records thing, I have no idea what he's talking about.

It seems to me your party, Todd, is playing to the whackjobs. They're having fun with this issue. They don't want to say no to them. People like Senator Shelby have their press flacks go out and say he doesn't believe this stuff, but they personally, when asked about it, refuse to knock it down. We now have, by the way, more than 10 members of Congress who now are on record demanding that all future presidential candidates produce a birth certificate, as if they haven't done so far. We're looking at pictures of them.

This is not my imagination. The Republican Party has gone nativist. It's becoming like the no-nothing party of old. What is going on, Todd Harris?

HARRIS: I think that this whole issue is ridiculous, frankly. I think the people who are pushing this issue are not a bit nuts, but a lot nuts. And I have to tell you, Chris, you talk about, you know, Republicans playing games with this issue as if there was some strategy behind it. Every single Republican consultant that I know rolls their eyes at this issue and wants it actually to go away because I think we are making real traction taking on the president on, you know, his massive government health care bill, wasteful spending in the stimulus bill.

All of these issues, real substantive issues that I think matter on election day, we're getting in some good licks against the White House, and this issue is a massive distraction from all of that. I don't know a single Republican strategist or consultant who enjoys any of this.

But I will say, I do have to agree with Cantor's office. It seems to be people in the mainstream media and people who are more on the left who are giving the platform to this whole ridiculous movement...

FINNEY: Todd, stop.

HARRIS: ... to even have it (INAUDIBLE)

FINNEY: Now, come on, Todd. That's a little ridiculous. I mean, it is a legitimate thing to say-to make the Republican members of Congress have to explain this kind of ridiculous idea that's floating out there. And let's be honest, a number of them don't have the guts to say to the camera that they think it's crazy and ridiculous. Why? Probably they don't want to offend the whackjobs at home, just like they didn't want to offend Rush Limbaugh.

So the fact that-you know, they're trying to have it both ways here, on the one hand, trying to say that it's Democrats making an issue of it, but then on the other hand, you've got-you do have legitimate birther people who are-you know, I think they're a little crazy, but then you don't have any-not one single Republican member willing to say, You know what, this is ridiculous. We need to move on. So you can't really have it...

HARRIS: John Boehner...

FINNEY: You can't really have it both ways.

HARRIS: John-I mean, John Boehner said as much two days ago, but the mere fact that Karen thinks that...

HARRIS: Well, he is our leader. The mere fact that Karen thinks that we should be talking about this, I think adds all the more credibility...

FINNEY: I actually don't think we should be talking about it, Todd.

(CROSSTALK)

FINNEY: I'm actually more concerned what you're concerned with is getting licks in against the president, rather than actually solving problems.

MATTHEWS: Why is Roy Blunt out there...

FINNEY: But Chris wanted to talk about it.

MATTHEWS: Just a minute. Todd, you're my good buddy. Why do you think Roy Blunt's out there pushing this issue? We saw him do that on camera. We can show it again, if you'd like, but he's out there saying he wants to see the president's birth certificate. He was up there-he was up there on the platform during inaugural day. Why didn't he come down and ask the guy who was about to be sworn in, Can I see your birth certificate? Why is he doing this now, Todd Harris?

HARRIS: I have no answer for that. I think it's inexplicable.

(LAUGHTER)

HARRIS: You know, look, "The National Review"-"The National Review," which is hardly a left-wing publication, just wrote an entire editorial saying this whole thing is ridiculous. Of course, he has a valid birth certificate. Of course, he is an American citizen. The more we talk about this, the less we're able to talk about Obama's massive takeover of our health care system, and I think that's an issue that more people should be talking about.

FINNEY: You know, Chris, there are a couple points here. One, if you remember, there was an issue during the campaign about, as Todd should know quite well, John McCain's birthright, given that he was born in the Panama Canal. And there were a handful of members of the Congress, including Hillary Clinton and Barack Obama, who passed a measure to point out how ridiculous it was and how important it was to sort of move on past that. You know, the other point I would make about this is...

MATTHEWS: They are raising whether he's American or not. It's not whether he was technically born out of the country. They don't believe the guy named Barack Hussein Obama is one of us. They are pushing it this morning, Kenya, not that he was technically somehow now ineligible...

FINNEY: No, but Chris, the point I'm making...

MATTHEWS: ... that he lied about it.

FINNEY: ... is if we really want to play this game, which is ridiculous, obviously, which I don't really want to, you know, there were people who wanted to try to raise that issue on the fringe of the left during the campaign, and we said, You know, that's not how we're going to win this election. We're going to win this election on the issues, and we did win the election.

But the other thing I want to point out that I think this poll shows, here you have the base of the Republican Party shrinking. And we really started to see that in 2006, where you started to lose support among Hispanic voters. We saw that trend continue into 2008, where Republicans lost support among African-American voters, among young voters, among women voters. I mean, this is what's happening to the Republican Party.

The shrinking base of the Republican Party is this very narrow percentage that apparently believes in this-you know, this "birther" issue, and I think a lot of the Republicans don't want to accept the fact that we won and this president is actually trying to move forward and do some things for the country.

MATTHEWS: Let's talk about the Republican Party for a second, your party, Todd. It seems to me you're losing-well, you lost Specter, although that was opportunistic, obviously. You lost Specter. But obviously, his opportunism was based on the fact your party's in bad shape in the Northeast. You lost-you're losing all kinds of-you have no Republican members of Congress from New England. You've got one or two left in New York. It's dying out as a political party in the Northeast.

Meanwhile, you got Voinovich, the lame duck senator from Ohio-I've never seen a member of the Senate say this, "We've got too many Jim DeMints and Tom Coburns. It's the Southerners. People hear them and say, These people, they're Southerners, the party's being taken over by Southerners. What the hell have they got to do with Ohio?"

I've never heard such a regional attack before on-within a party. I've never heard the Democrats-what do you make of your party? It seems to be having a geographic divide here.

HARRIS: Well, I couldn't disagree with Senator Voinovich more. The problem is not too many Jim DeMints, the problem is that we don't have enough George Voinoviches in places like Ohio and enough candidates who can run, and more importantly, win in places like the Northeast.

But I will say that, given everything-I think the greatest gift, ironically, to the Republican Party's chances next year is how far to the left President Obama...

MATTHEWS: Can I suggest where your party went wrong? And then I'll let Karen take over. Your party went wrong back when George Bush, the governor of Texas, a young guy, didn't know much about a lot of things, asked the senior uncle figure, his avuncular figure, Dick Cheney, to pick his vice president for him. Well, Dick Cheney somehow picked himself, as chairman of that committee.

FINNEY: Convenient!

MATTHEWS: In picking himself, he knocked apart a guy like Tom Ridge, who was a good moderate Republican from Pennsylvania. If your ticket had been built North/South, a Texas governor, a Pennsylvania governor, you would have had a reasonable party representing the country. Instead, you got an oil patch party put together through the-well, I think the mischief of Dick Cheney, knocking out Ridge from consideration.

Do you agree with me, your party would be a lot healthier if you didn't have Dick Cheney, who talked us into the war in Iraq and did everything else lousy in that last administration that you can point to? Isn't that where you went wrong, Cheney?

HARRIS: I have no idea, if something that didn't happen had happened, how things would be today. What I will tell you is that-the fact that George W. Bush was not on the ballot in '08 and won't be on the ballot in 2010. I know that's putting a lot of people on the left, you know, just in fits, but...

FINNEY: We did just fine in '08 without him, Todd!

HARRIS: ... they're not-they're not the leaders of the Republican Party anymore.

FINNEY: We did fine in '80 without him. I just want to put in a plug because I have family members, Democrats, in the South, in North Carolina and southern Virginia, so I don't-I think they'd be a little but offended to think that it's all about being Republican. I just want to give a little plug because there are a few folks around that fly the flag for Democrats.

MATTHEWS: I know. You missed my point. Thank you, Karen, for holding the flag down there. Anyway, Todd Harris, thank you, sir. What a good sport you are to hold the flag as the party goes down.

Coming up: With the August recess upon us, what will members of Congress face when they go home? Well, angry mobs apparently are disrupting the town hall meetings all over the place, tough new ads running against everybody. I think they're going to go on vacation myself.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. August is nearly here, and there's still no health care bill. President Obama acts like there's an urgency to getting this done, but why isn't anybody else acting that way? Where are the people marching in the streets? The streets are empty in this town. If they really want it, where are they?

Ron Brownstein's political director for Atlantic Media and Susan Page is the Washington bureau chief for "USA Today." I do not want to knock health care. I believe this country needs a health care plan for everybody, especially the uninsured. But the streets are empty. People have-disabled people come here. Gay rights people come here. Anti-war people come here. Pro-life people come here. When somebody wants something, they fill the streets of Washington. Susan Page, the streets are empty.

SUSAN PAGE, "USA TODAY: Well, but you know, the August deadline was a political deadline that...

MATTHEWS: Well, where are the people since January, since this president was elected? There's no public demonstration of support for health care.

PAGE: I think the White House has been a little surprised at the trouble of ginning up the support from this network that was so helpful during the campaign on the issue of health care.

But I think it's-I think it just may be a question of timing. Obama thought you needed to get it done before August because he knows he's fighting a lot of battles. He needs to get it done while he's still pretty popular. But I think when they come back, the sense of urgency is going to be there. People do expect...

MATTHEWS: OK...

PAGE: ... something to happen by the end of the year.

MATTHEWS: You've slipped over the visuals. This August, the president will be up there with his very attractive family, hanging out with the celebs in Martha's Vineyard. Nothing wrong with that, except it's a time he said is urgent that we get something done. Is that going to seem too complacent?

RON BROWNSTEIN, ATLANTIC MEDIA: Well, I think that they-their plan is not, as you suggest, to have a major focus from him in terms of big drive in August. But I think your larger point is correct. In general, across the board, whether it was stimulus, climate change, or now health care, I think the organization of the left has not been what the White House would have hoped and expected. There really-they have not been able to generate the kind of grass roots pressure, particularly in these marginal districts where you have the Blue Dog Democrats, and moderate Republicans and those Democrats from red states, 22 Democratic senators from states that voted both times for Bush.

They have not really been able to-and what's really striking about all this, Chris, is if you think about what's not happening-they are having trouble generating pressure for this even after Obama has been successful at neutralizing the biggest guns in industry that helped mobilize to beat Clinton. So you don't have the drug industry out there with ads against it. You don't have the insurance industry out there, the hospitals.

MATTHEWS: There's no Harry and Louise.

BROWNSTEIN: The doctors are more supportive than not. And yet even despite that, the general trend in public opinion has been moving away from them, and that says that they are losing the message war at this point, even without the biggest guns that could be arrayed against them.

PAGE: It's a-it's a complicated issue. It's not like abortion. You are for or against abortion. You are for or against gays in the military.

Health care is a very complicated set of interconnecting issues. One

affects the other. And-and I-I think it's true that it's been harder

maybe than they expected to get things going in the House and Senate, but -

but it's just a different sort of issue.

There is urgency, I mean, a lot of urgency for people who lack coverage, like up to 50 million Americans, and a different kind of urgency maybe for people who have insurance and are worried about costs going up or having to deal day and night with their insurance company.

MATTHEWS: Why isn't the president out there selling-you know, they used to say in politics, play your strengths. Maybe they should.

He seems to be defensive. He says, this won't hurt you. We don't have people coming to your house telling you how to die, you know, that stuff. He's fighting that fire, instead of saying, you know, what kind of a country do you want to live in? Do you want to live in a country where 50 million people don't have health insurance, they have to go to the emergency-do you want to live in that country?

Or do you want to live in a country where you have to-when you change jobs, you lose your health insurance?

BROWNSTEIN: Right.

MATTHEWS: Do you want to live in a country where preexisting conditions can nail you from any real coverage?

BROWNSTEIN: Well, I-I think they have to try to more to focus on what this would mean for people with insurance.

Census Bureau, 85 percent of Americans do have insurance. And there have been analysts, like Drew Altman the Kaiser Foundation, which studies health care issues, who has argued from the beginning that the key variable in public opinion on this would be whether people who are insured believe it would hurt or help them.

Those numbers started positive for the administration. And they have moved in the wrong direction.

MATTHEWS: Michael Moore did a better job with the movie "Sicko" than...

BROWNSTEIN: But...

(CROSSTALK)

MATTHEWS: ... this guy has done, because Michael Moore aimed that movie-maybe because ticket prices are $12 to see a movie-at people who had health insurance, and said, you think you're insured? They got experts, doctors down at that...

BROWNSTEIN: ... which is basically trading an individual mandate on people to buy insurance...

MATTHEWS: Right. I'm with you.

BROWNSTEIN: ... for fundamental insurance reform. And, so, for the administration to kind of turn around and try to make them the demon blocking reform isn't really as credible as it might have been for Bill Clinton.

MATTHEWS: ... who said, let's declare war in Vietnam and come home, like that guy said, that colonel is saying now in Iraq.

(CROSSTALK)

MATTHEWS: Should the president say, what-all I ever wanted was the whole country to be in this together, and if I can get an individual mandate from the time you turn 18 or 21, like you do with a car, you have to join a national health insurance program, I have won?

BROWNSTEIN: No, go back to Susan's point.

The problem is, once you require individuals to buy insurance, which is the key to fundamental reform, by bringing everybody into the risk pool, once you do that, you have to make it affordable for them. And the only way to make it affordable to them is to-is to provide government subsidies to help people of moderate income pay for that insurance.

And, once you do that, you're back to the question of, how do you pay for it? So, you really can't-you can't just do that one thing with-with-and escape the larger problem you have. The bigger problem is, how do you pay for it?

MATTHEWS: OK. Are we going to have a-let's-let's-let's jump ahead. Let's be really smart here.

(LAUGHTER)

MATTHEWS: Come October or November this year, around Thanksgiving, when they're playing with that-remember, they always-when they always let the turkey go? The president does that B.S. thing.

MATTHEWS: Around that time, will the president sign a bill that's gotten through both houses that basically says you have to join, that basically sets up some kind of network of cooperatives that allows you to get a cheaper rate than you might get from an insurance company? Will we have that?

BROWNSTEIN: I-look, I think the Democrats have opened door number one. They have gone through door number one in 1993 and '94. Door number one was allowing the whole thing to collapse. And when they went through door number one, they lost control of Congress and stayed out of power for 12 years.

There's a lot of fear about going through door number two, and actually doing something. But it's hard to imagine they will conclude that the risk of going through door number two is bigger than the risk of going through door number one.

MATTHEWS: OK. Here is my theory. This president ran as a transformational president. He didn't want to be just another president, like Clinton or Jerry Ford. He wants to be like Ronald Reagan or like Franklin Roosevelt.

If he gives up on this bill, if he loses on this bill...

BROWNSTEIN: Right.

(CROSSTALK)

MATTHEWS: ... he end up being just another survivor president like Clinton...

(CROSSTALK)

MATTHEWS: ... just hanging in there and doing school uniforms.

(CROSSTALK)

MATTHEWS: Am I tough enough?

(CROSSTALK)

PAGE: And-and, so, you will have a bill, but how big a bill and how bipartisan?

You're watching HARDBALL. And the-and the "Sideshow" is coming up here on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Time for the "Sideshow."

First up: Rudy Giuliani takes sides again. Famous, or infamous, for always siding with police, former New York Mayor Rudolph Giuliani did it again last night, as he positioned himself opposite from President Obama on the Professor Gates episode and what we can learn from it.

(BEGIN VIDEO CLIP, "HANNITY")

RUDOLPH GIULIANI ®, FORMER NEW YORK MAYOR: He's actually right. It is teachable. Here is the lesson.

SEAN HANNITY, HOST: Yes, shut up.

GIULIANI: You shut up.

(LAUGHTER)

GIULIANI: And, also-and, also, shut up when a cop, like, is asking you questions?

GIULIANI: How about you don't insult them, you don't yell, you don't scream? My father taught me that when I was very young. I grew up in Brooklyn. It was a good lesson.

(END VIDEO CLIP)

MATTHEWS: OK, the mayor is right about what you're supposed to say to a police officer, but what about what a police officer is supposed to do and say to you, and how he's supposed to treat all people the same? That's the question the president tried, rightly or wrongly, to answer.

Next up: My old boss Tip O'Neill once noted that all politics is local. So, what does a number like this mean for the once popular governor of Alaska? Look at that number. Forty-eight percent of Alaskans now have negative feelings about Governor Palin, edging out the 47 percent who have positive feelings.

Back in May of 2008, a little-about a year ago, that same poll had her positive rating at 86 percent. She's had a 40 percent drop. The new numbers are a less-than-ideal springboard, you might say, for a presidential campaign run in 2012.

More on the ex-governor's troubles up there in Alaska in tonight's "Politics Fix."

Now for tonight's "Big Number."

White House press secretaries are masters at the art of dodging questions, of course. Each one, over the years, picks out his evasive method of choice. Current Press Secretary Robert Gibbs, his favorite tactic, he says, "I'm not going to get into it."

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I'm not going to get into commenting on what is or is not accurate in the media.

Anyway, all in all, how many times has he, the great Robert Gibbs, deployed the device of "I'm not going to get into it"? According to Politico, 120 times and more. The White House press secretary dodged over 120 questions with the 120-time mention of "I'm not going to get into it."

And that's tonight's "Big Number."

Where do we come up with this stuff?

Coming up: Just how involved was Karl Rove in the firing of those eight U.S. attorneys during the Bush administration? Mr. Rove says he did nothing wrong, but new information suggests he may have had a lot more to do with it than he's letting on. We will get the latest on Rove and what he was up to.

A mixed end to the week on Wall Street-Dow Jones industrial average adding 17 points, the S&P 500 closing up a fraction, and the Nasdaq finishing down just about six points. Overall the Dow add more-added more than 8 percent in July. That's the strongest showing for any month since October of 2002.

Investors were cautiously optimistic about today's GDP report, the nation's gross domestic product contracting at a 1 percent annual rate in the second quarter. Economists had expected a slightly larger decline.

The federal cash-for-clunkers program is hoping to get some roadside assistance from Congress. The House voted today to pump another $2 billion into the popular program. The Senate is expected to vote on the funding refill next week.

And that news extended a rally for Ford today. The automaker has already seen a dramatic boost in sales thanks to the program, Ford shares adding more than 8 percent in Friday's trade.

That's it from CNBC, first in business worldwide-now back to

HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Karl Rove gave closed-door testimony to the House Judiciary Committee regarding his role in the firing of those federal prosecutors back in 2006. And some e-mails shed light on his role in the firings.

"Newsweek"'s Michael Isikoff is an MSNBC contributor, and "Mother Jones" magazine's David Corn also writes for PoliticsDaily.com. Together, they rote "Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War."

By the way, you should get that. I'm sure you can get it somewhere right now, "Hubris."

(LAUGHTER)

DAVID CORN, WASHINGTON BUREAU CHIEF, "MOTHER JONES": In paperback.

MATTHEWS: In paperback or in remainder. I'm sure it's out there.

(LAUGHTER)

CORN: Oh.

MATTHEWS: I'm just teasing.

(LAUGHTER)

MATTHEWS: It's a hell of a book. You guys did all the work in what -

one of my favorite sagas, the role that Cheney and those guys did in selling us on the war, covering up their tracks. And now we got more cover-up perhaps here.

What-the last time we talked about Karl Rove, Bush's brain, so-called...

MICHAEL ISIKOFF, MSNBC CONTRIBUTOR: Yes.

MATTHEWS: ... he basically skated on the prosecutions in the Scooter Libby case involving Valerie Plame, soon to be a major film.

(LAUGHTER)

(CROSSTALK)

MATTHEWS: But can he do this again? In other words, it's always the question, not the crime. It's the cover-up, as we all know.

ISIKOFF: Right.

And the short answer is yes. Look, the trouble he got himself into during the Valerie Plame investigation-and it's useful to remember he had to testify five times before the grand jury, and he came-and came very close to being indicted-Patrick Fitzgerald was looking very closely was because he testified to things that then got contradicted by e-mails that were-that Fitzgerald got ahold of. And, so, then Rove had to explain why he testified-why he didn't testify accurately his first times before the grand jury. In this case, remember, he never testified last year-or two years ago, when the Judiciary Committees were holding hearings on this. He was -you know, they claimed executive privilege, so there was no fixed testimony to which he could be contradicted to. He didn't finally give his account to both the special prosecutor, Nora Dannehy, in this and the House Judiciary Committee until after he had already seen the e-mails that were already out there. So, the bottom line is...

David, in a case where you have a prosecutor-I know that presidents are allowed to pick special prosecutors...

CORN: Right.

MATTHEWS: ... U.S. prosecutors, at their own discretion and at their pleasure. And they serve at their pleasure. I understand that.

CORN: Right.

MATTHEWS: But I understand it's against the law to obstruct justice.

CORN: Right.

MATTHEWS: If there's a prosecution in progress, and it's seen that a presidential aide or anyone else had a prosecutor yanked in the middle of a real prosecution in order to protect the defendant, that's a crime.

CORN: Yes, if you could prove that, that would be obstruction of justice.

I mean, the argument here in-in the case of the New Mexican attorney...

MATTHEWS: He used his muscle to bump a guy, a U.S. attorney who was doing his job, so that he could get a crony a job?

ISIKOFF: Right.

CORN: Right.

(CROSSTALK)

MATTHEWS: That's legal?

ISIKOFF: Well, yes. I mean, it was not-you can-U.S. attorneys are political appointees. They can be replaced at the pleasure of the president for political reasons.

They can't be replaced to obstruct an investigation. But, if the U.S. attorney wants to-if the president wants to have somebody who is a buddy of Karl Rove replace as-a U.S. attorney, there's no problem why he can't do it.

ISIKOFF: It's been known for quite some time that Rove wanted Tim Griffin in there. The new e-mail that his lawyer showed to "The New York Times" and "Washington Post" make that case even stronger.

The only legal issue here-again, it's for Nora Dannehy-is-it's not obstruction. It's whether somebody made false statements. There was a letter that went out early on that said the Department of Justice had no-had-did not know-was not aware of Karl Rove playing any role in the replacement of Bud Cummins by Tim Griffin. That was false. It was admitted to some time ago. But the new evidence makes that even stronger.

CORN: The new evidence also indicates that indeed he was more involved than he has said in the past, which is another-again, it's not a crime in Washington to lie. We know that. If you tell the president of the United States, I'm not involved in this Valerie Plame leak, and then they come out and they say to the public, and it turns out you are, which is exactly what happened with Karl Rove, it's not prosecutable. But again, it's wrong.

And so Karl Rove now makes his living as a pundit, a so-called truth teller, his own truth. If it turns out this evidence indicates he's not a guy to be trusted, that should have some impact, too.

MATTHEWS: What do we know now? As reporters-you guys have written the best book on it, the role that Rove and Libby, the chief of staff to the former vice president, all those guys, played in terms of the big role in American history. The tough way in which they prosecuted the war, made the case for the war, and then punished those who brought it into the question.

ISIKOFF: Look, that's certainly the ultimate legacy of the entire Bush crowd, is going to be the war in Iraq and all the mistakes that were made.

MATTHEWS: It looks like we're finally going to be pulling out of there pretty soon.

ISIKOFF: But there's no question that Rove was not an architect of the war itself. He was the political guy in the White House. He did play a very key and instrumental role in sort of shaping the spinning of the war and the spinning of the post-war aftermath, in which they had to explain-

CORN: And the exploitation of 9/11.

ISIKOFF: Right, exactly.

CORN: I mean, that was his big contribution. The exploitation of 9/11 for political purposes and how they used that, in part, to sell the war in Iraq, which led to a host-

MATTHEWS: What went wrong politically? Why did the Bush administration, because of the way they led this country, lead to the election of Barack Obama? I do believe these are connected.

CORN: I think you're right.

MATTHEWS: I think there was a tremendous national reaction to Rovism, the Bushism, to the whole connection of these guys.

CORN: What they did is they wanted the war so badly they rigged the debate. If there had been an honest debate before the war-we don't know exactly what he has, but we still think we should do something, however you want to put it, you could either win or lose that debate. I think they feared they would that debate. But by rigging the debate with bad evidence and saying, there was no other possible course of action, which was not true either, and then dismissing the inspections, and then saying, we know this is going to take three weeks, going to cost no money-

The whole way they rigged it led to a bad taste and showed the politics of Karl Rove really is not good in the long run.

ISIKOFF: And that plus the fact that by 2004, when things really started to go south in Iraq, they had to spin that and they had to downplay all the problems that the war was causing, the increased casualties, the mismanagement of occupation, because they had to get re-elected. That was Rove's brief in 2004.

So by downplaying it, you know, the problems festered, became worse and the public didn't realize it until after.

MATTHEWS: You guys are my heroes. You do all the hard work of investigative reporting. Thank you, Michael Isikoff. Thank you, David Corn. The book is called "Hubris." You can get it now rather inexpensively. Look for it in the box outside the bookstore. Those are great places to buy books, by the way.

It's another Sarah Palin scheduling snafu. You think this is crazy, except there's a crazy pattern to this person. She sets up these big events, puts out the word she's going to go somewhere, and doesn't show up. Is this Simon Says? What's the story here? She was going to go to the Reagan library. We were saying that's her big event. Apparently, she now says I'm never going to the Reagan library or whatever. But the big story is her poll numbers are crashing up there in snow country, up in Alaska. Politics fix coming up. We're going to talk Sarah and we're going to talk the birthers. By the way, I think they're all connected. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back. Time for the politics fix. Michelle Bernard, of course, is an MSNBC's political analyst. And Jay Newton Small is a Washington correspondent for "Time." Thank you very much, ladies, for joining us tonight.

What do we make about the birthers thing? I have been accused of hitting this too hard. But I'm stunned every time I look at these numbers that just came out this morning. They are stunning. Most Americans give this short shrift. You know, one in 10 people think it's for real. And they haven't really thought it through, I don't think.

But it's so heavily embedded among the Republican party, a majority of

whom now either buy it or think there's something to it. And in the south

and this is very troubling-a majority of people are either in the group that buy the fact he wasn't born here, in the south, or think they're not sure, they say.

MICHELLE BERNARD, MSNBC POLITICAL ANALYST: I don't want to pick on people in the south, because I don't know if it's that they are southern or just the fact that the Republican party right now seems to be a geographic party. But it's embarrassing. I don't understand it. I didn't think it could get any crazier after we had people continuing complaining that he was Muslim, despite the fact he kept saying I'm a Christian.

I have been watching all week, for the last two weeks. We've seen his birth certificate, even the fact that anyone had to show it is an embarrassment. And there are many Republicans now who are saying, you know what? Those are right wing conservatives. Don't call me conservative. I'm a Republican. There's a difference.

MATTHEWS: Roy Blunt was asked by that blogger the other day, standing out in front of the Capital. He still played the game; I want to see his birth certificate; I want to see his health records. This is a leader of the party. You've got to get 10 or 11 members now pushing for a resolution on this thing.

Look at these numbers. Now this is not dreaming it. Obama is born in the United States; OK, 93 percent of the northeast say, of course. They say he was born in the United States, end of story. Ninety percent in the Midwest, 87 percent in the West, 47 percent in the south.

I mean, what's this about? What's wrong with this picture? You've got to go-this has got to be strange. Your thoughts.

JAY NEWTON-SMALL, "TIME MAGAZINE": Well, look, if this is just symptomatic of that there's no strong leader for the Republican party in Washington, D.C. Like when-

MATTHEWS: Would strong leaders say these people are nuts?

NEWTON-SMALL: No, but when Nancy Pelosi was speaker before Barack Obama was elected, all there were all these people from the left trying to say, impeach Bush, impeach Cheney; she was strong enough to say, no, I'm not going to let my chairman do this. I'm not going to let anyone introduce legislation. I'm not going to say anything about it. Bam, no one's going to do it.

In the House now, you just don't have guys who are strong enough to say, no, don't introduce legislation that's embarrassing to the party, that 11 members are going to sign on to, and cause all kinds of problems in the party.

MATTHEWS: I disagree. I think the Republican party enjoys the fact that they're getting hopped up on the right, because the more people who are hopped on the right-we have an election next year, where very few people vote. Minorities don't vote, young people don't vote in off year elections. We know that. It's historical. If they can get older, white people to vote in the election next year, and they're all hopped up on this thing-a third of them are. Look at these numbers.

MATTHEWS: A majority either in-wasn't born here or I don't know if he was born here. That's the majority. If they can get their party hopped up on this right-wing crazy juice, they may be able to get the core of a mandate to beat the Democrats next time.

BERNARD: Yes, but is it going to happen outside of the south?

They'll turn around-

MATTHEWS: These are national numbers.

BERNARD: I know, but look where they're concentrated.

MATTHEWS: I know they're concentrated here. Let me go through these names, because I think it's fascinating. These are members of Congress. Marcia Blackburn, John Campbell of California, John Colbertson of Texas, Bob Goodlatte of Virginia, Randy Neugebauer of Texas, Dan Burton-isn't he the usual suspect-of Indiana, John Carter of Texas, Louie Gohmert of Texas, Kenny Marchant of Texas, Ted Poe of Texas, all elected members of Congress who want to see the birth certificate of the next president, because they believe this guy snuck under the wire.

NEWTON-SMALL: You'll note that none of the leaders are on this. Roy Blunt is a former leader and he is also running for governor of Missouri.

MATTHEWS: He's a member of the Congress.

NEWTON-SMALL: He is a member of the Congress, but he's not an actual leadership anymore. He's running for governor of Missouri. He's out of leadership.

MATTHEWS: Senator Shelby was asked about it. He had a problem answering the question. They had their flacks go out and say-when they're asked, they don't want to break-they want a big tent that's big enough for the nut jobs. We'll be back with Michelle Bernard and Jane Newton-Small with more of the politics fix. Let's talk about Sarah Palin. You're watching HARDBALL.

MATTHEWS: We're back with Michelle Bernard and Jane Newton-Small to talk about the politics fix. Sarah Palin, I continue to argue, is probably the starring attraction of the Republican party. Compared to, say, Mitt Romney, she's interesting; she's glittering; she's got something to say. Let me ask you, since we haven't had you on the show lately, Jay; has she got problems with the fact that her favorables are now lower than her unfavorables, up in a part of the country she says is typical, Alaska.

NEWTON-SMALL: Certainly. I mean, look, she's not had an easy couple of months. She hasn't had an easy time really since-my god, since virtually the acceptance speech at the Republican National Convention. And she's got a lot of issues that she really isn't trying at this point-she says she isn't really trying at this point to reach out to moderates, reach out to independents. What she really is looking for is to reach out to the base. With the base, she still remains incredibly popular.

MATTHEWS: These numbers, the fact that she went from-well, from something like 86 down to 46, something like that.

NEWTON-SMALL: I mean, when she was elected as governor of Alaska, she was elected more so on the backs of Democrats, than she was on the backs of Republicans, because she'd taken on Frank Murkowski, who was a Republican governor, very corrupt, and she'd done a lot of damage to Republicans in her own party, to the Alaskan Republican party.

Almost everything she did in her first term-first two years-excuse me-was on the backs of Democratic support, not Republican support. So that 86 percent approval rating was really a lot of Democrats, a lot of independents, and not a lot of Republicans.

MATTHEWS: I think she's got all these technical things that are brilliant, the windshield wiper wave, the cute little hand thing. I think it's all very attractive. I think-I mean, seriously. She's obviously a great show. Compared to any politician-look at her, there's the typical comparison, her and that guy. Who are you going to look at? She's more interesting. She's got something to say. She's lively. She puts on a show. She comes to the microphone determined with something.

Most guys -- most people in politics are guys-they come to the microphone, I guess I got to talk now. They go, blah, blah, blah. She's up there, boom, boom, boom, boom, boom.

BERNARD: She's got moxie. If you look at the typical person that you see that represents the Republican party, it's some white guy that's boring and uninteresting. People are still scratching their heads and trying to figure out. I think the negative ratings right now are inconsequential. What she has to do is she's got to get whatever's going on in her staff together.

MATTHEWS: Would you want her to speak to your group, your women's group?

BERNARD: I'm a fan of hers. I think she's got some issues and learning to do, but I'm a fan of hers.

MATTHEWS: Would you like to be her top aide?

BERNARD: No.

MATTHEWS: Why not?

BERNARD: Because I like being my own aide.

MATTHEWS: That's a subjective view. Don't you think she'd be really

I mean, Jack Kennedy was-became Jack Kennedy when he found Ted Sorensen. A lot of these people just need to have the right people around them and everything works. Axelrod, I'm sure, has been a great advantage to this president.

BERNARD: She needs to find that person.

MATTHEWS: Nobody can do this all by themselves. This idea that you're in in this-it doesn't work. You need a team. I'm told by Norah O'Donnell-just got back from up there-the secret to her is she's all by herself. She doesn't have a team around her. She thinks, for whatever reason, I can do it myself. And it doesn't work that way in politics.

NEWTON-SMALL: Absolutely. She's got-she's been in this kind of bunker mentality ever since she got back to Alaska. She feels under attack. She has this really tight-knit, small group of about five advisers in Alaska.

NEWTON-SMALL: They're all old loyalists. They've been with her for years.

MATTHEWS: They're not professional political people.

NEWTON-SMALL: These are people who when she said, I think I want to resign on July 3rd, to show how independent I am, and freedom, they said, great idea.

MATTHEWS: Their salaries are going up. Anyway, thank you, Michelle Bernard. Thank you, Jane Newton-Small. Join us Monday night at 5:00 and 7:00 Eastern for more HARDBALL. Right now it's time for "THE ED SHOW" with Ed Schultz.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.